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Real estate is an investment. All investment vehicles comes with a potential for profit and risk of loss. They should have done their homework.

mulmen 3y ago
I mean, sure. But let's acknowledge that "global pandemic" was justifiably considered a low probability before 2020. Even today should companies price in a meteor strike? Will they be out-competed in an existential timeframe if they do?
- sgu999 3y ago
  Remote working was already a trend before the pandemic, it only accelerated it massively.
  - mulmen 3y ago
    “Only” and “massively” are in conflict here. The massive effect of an unexpected event is how we got to this exceptional situation.
- tessierashpool 3y ago
  a) "global pandemic" was _not_ considered a low probability by epidemiologists or by governments. the US set up a pandemic office during the Obama administration for exactly this reason. partly because everybody knew climate change and globalization increased the risk of pandemics, and partly because pandemics tore through Asia and the Middle East in 2002 and 2012. b) remote work has been making office buildings obsolete for decades now. it is fundamentally absurd to say that you need people to get together in one room in order to build a distributed system. neither office buildings nor the "open plan" spaces inside have made any real logical sense for the tech industry in a very, very long time.
  - mulmen 3y ago
    I agree with you in general but in the context of real estate investment I'm not sure the sudden normalization of WFH and effect on commercial real estate was reasonably predictable.
    - cudgy 3y ago
      From a macro perspective it certainly was predictable given the trends that have been mentioned. From a micro “make as much money from the most suckers now” and “build it and sell it to a REIT” perspective it was able to be ignored.
      - mulmen 3y ago
        Ok so who were the big winners who bet on the pandemic?
        cudgy 3y ago
        In the example I provided, it would be those that sold their commercial real estate before the pandemic. Other winners would be pharmaceutical companies, residential builders, internet retailers, people that prefer working from home, and families that enjoy each others company to name a few. However, I was not addressing that.
        mulmen 3y ago
        Who sold their commercial real estate pre-pandemic? Who is the big winner here that saw the thing everyone else missed?
        tessierashpool 3y ago
        Obama set up a pandemic preparedness office which coordinated with China. can't call it a huge win, since the other guy dismantled it in 2018, but easy to say there's a person who saw a thing that others missed. (edit: oops, I said that already. sorry, it's been a week. only just saw this reply.) the big win with remote work is not selling off commerical real estate but being smart enough not to buy it in the first place. or to found a screensharing and video chat company. so a big winner there is Zoom. and a whole set of winners would be the companies who were already doing remote work and didn't have to skip a beat. other companies which saw a boost from the pandemic: literally all of e-commerce. every sketchy ad on Instagram selling a $10 product from Alibaba for $50. and the platform they ran on: Shopify. which of course overhired when it saw a huge boom in traffic, and now has had to correct that overhiring. delayed reply but there are countless examples.
- BeFlatXIII 3y ago
  What responsibility do the rest of us have to keeping the commercial real estate market healthy?
  - mulmen 3y ago
    None. I’m just pointing out the decision making isn’t surprising from a corporate perspective.
  - RestlessMind 3y ago
    None. But that's orthogonal to your GP's point - "They should have done their homework." This was not a case of missing "homework". This was literally a once-in-a-century event no one plans for.
    - cudgy 3y ago
      There are many once-in-a-century possibilities like flooding, fires, terrorism, pandemics, structural failures, wars, ecological disasters, eminent domain, etc. Add them all up and you actually have a many-in-a-century event scenario. Companies that are already setup for remote work will be at an advantage, by not having a large percentage of their resources at a single or several large locations, and able to continue operations with little or no disruption. In short, the remote model is decentralized and therefore more resilient and less risky.
      - mulmen 3y ago
        Sure but what you do about these events is very different. Eminent domain and business districts are almost synonyms and much different than a war or terrorism. How do you price all of this into your real estate buying decisions? I don't dispute the benefits of remote work but can we at least admit that the world changed drastically and unpredictably in the last few years?
        cudgy 3y ago
        The impact is the same regardless of event. A centralized location being affected by any of these events is going to impact business negatively to a much greater degree than a company whose workers are spread out in different locations. As for real estate buying decisions, it depends on the industry of course. So, given a standard tech business, you buy what you need for positions that cannot be performed remotely and estimated space for those workers that desire to work at that location hopefully in a location close to where these workers live (which is likely not in a typical downtown city location). Basically, smaller satellite offices near where the people that have to go to a physical location live.

mulmen 3y ago

I mean, sure. But let's acknowledge that "global pandemic" was justifiably considered a low probability before 2020. Even today should companies price in a meteor strike? Will they be out-competed in an existential timeframe if they do?

sgu999 3y ago
Remote working was already a trend before the pandemic, it only accelerated it massively.
- mulmen 3y ago
  “Only” and “massively” are in conflict here. The massive effect of an unexpected event is how we got to this exceptional situation.
tessierashpool 3y ago
a) "global pandemic" was _not_ considered a low probability by epidemiologists or by governments. the US set up a pandemic office during the Obama administration for exactly this reason. partly because everybody knew climate change and globalization increased the risk of pandemics, and partly because pandemics tore through Asia and the Middle East in 2002 and 2012. b) remote work has been making office buildings obsolete for decades now. it is fundamentally absurd to say that you need people to get together in one room in order to build a distributed system. neither office buildings nor the "open plan" spaces inside have made any real logical sense for the tech industry in a very, very long time.
- mulmen 3y ago
  I agree with you in general but in the context of real estate investment I'm not sure the sudden normalization of WFH and effect on commercial real estate was reasonably predictable.
  - cudgy 3y ago
    From a macro perspective it certainly was predictable given the trends that have been mentioned. From a micro “make as much money from the most suckers now” and “build it and sell it to a REIT” perspective it was able to be ignored.
    - mulmen 3y ago
      Ok so who were the big winners who bet on the pandemic?
      - cudgy 3y ago
        In the example I provided, it would be those that sold their commercial real estate before the pandemic. Other winners would be pharmaceutical companies, residential builders, internet retailers, people that prefer working from home, and families that enjoy each others company to name a few. However, I was not addressing that.
        mulmen 3y ago
        Who sold their commercial real estate pre-pandemic? Who is the big winner here that saw the thing everyone else missed?
        tessierashpool 3y ago
        Obama set up a pandemic preparedness office which coordinated with China. can't call it a huge win, since the other guy dismantled it in 2018, but easy to say there's a person who saw a thing that others missed. (edit: oops, I said that already. sorry, it's been a week. only just saw this reply.) the big win with remote work is not selling off commerical real estate but being smart enough not to buy it in the first place. or to found a screensharing and video chat company. so a big winner there is Zoom. and a whole set of winners would be the companies who were already doing remote work and didn't have to skip a beat. other companies which saw a boost from the pandemic: literally all of e-commerce. every sketchy ad on Instagram selling a $10 product from Alibaba for $50. and the platform they ran on: Shopify. which of course overhired when it saw a huge boom in traffic, and now has had to correct that overhiring. delayed reply but there are countless examples.
BeFlatXIII 3y ago
What responsibility do the rest of us have to keeping the commercial real estate market healthy?
- mulmen 3y ago
  None. I’m just pointing out the decision making isn’t surprising from a corporate perspective.
- RestlessMind 3y ago
  None. But that's orthogonal to your GP's point - "They should have done their homework." This was not a case of missing "homework". This was literally a once-in-a-century event no one plans for.
  - cudgy 3y ago
    There are many once-in-a-century possibilities like flooding, fires, terrorism, pandemics, structural failures, wars, ecological disasters, eminent domain, etc. Add them all up and you actually have a many-in-a-century event scenario. Companies that are already setup for remote work will be at an advantage, by not having a large percentage of their resources at a single or several large locations, and able to continue operations with little or no disruption. In short, the remote model is decentralized and therefore more resilient and less risky.
    - mulmen 3y ago
      Sure but what you do about these events is very different. Eminent domain and business districts are almost synonyms and much different than a war or terrorism. How do you price all of this into your real estate buying decisions? I don't dispute the benefits of remote work but can we at least admit that the world changed drastically and unpredictably in the last few years?
      - cudgy 3y ago
        The impact is the same regardless of event. A centralized location being affected by any of these events is going to impact business negatively to a much greater degree than a company whose workers are spread out in different locations. As for real estate buying decisions, it depends on the industry of course. So, given a standard tech business, you buy what you need for positions that cannot be performed remotely and estimated space for those workers that desire to work at that location hopefully in a location close to where these workers live (which is likely not in a typical downtown city location). Basically, smaller satellite offices near where the people that have to go to a physical location live.